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Supposedly this engine was just serviced and the valves adjusted prior to its removal. Based on the compression I've ruled out the valve clearance but I have not checked the timing yet. I'm with you on the vacuum issue but there really isn't much to that side of the system when the air box it. I've checked the diaphrams before I posted and they look great and are operating fine. I thought maybe it had an ignition advace installed (which could explain a drop in vacuum) but it's stock. Once I get a new gasket on the timing cover(tonight) I can run it again to make a few more checks. I Also just noted a typo on the vacuum #'s in the previous post. It's 10-12 not 0-12.
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